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You can use our free cost of labor calculator to determine hourly, project, and even annual labor costs. Here’s what to plug in for each of those variables: Salary is the combined hourly wages for all employees assigned to the job. Direct costs are non-salary labor costs for the job’s workers (e.g., payroll, security, benefits). Indirect ...
Jul 10, 2024 · Labor cost percentage = Annual payroll labor cost / Total revenue. If our hypothetical restaurant's revenue is, let's say, 80,000 dollars in a year, the Labor cost percentage is 24,700 / 80,000 = 30.9 %. Note that the acceptable labor cost percentages are around 25 and 40 percent for a restaurant. The ratio varies by industry, however.
Number of job employees x Hours to complete job x Hourly pay. Let’s say you’re pricing a recurring weekly service. You’ll need two people on site for four hours to provide that service, and they both make $18/hour. That means the labor costs for each weekly job will be $144. (2 x 4 x 18 = 144)
Labor Cost Percentage. Labor cost percentage shows your total labor costs as a percentage of total revenue. The formula for calculating labor cost percentage is: Labor Cost Percentage = (Total Labor Cost / Gross Revenue) x 100. Aim for a result between 20% and 30%.
Paid Time Off (PTO): Estimate the value of PTO based on the employee’s wage and annual hours. Example: If health insurance costs $500 per month per employee, and PTO is valued at 8% of base wages: $500 x 12 (months) = $6,000 for health insurance. $41,600 x 8% = $3,328 for PTO. Total annual benefit cost:
Now that you understand the aspects you need to pay attention to, we can start with our step-by-step guide. These are the 6 steps you should take if you want to calculate labor-based pricing: Step #1 — Determine the total payroll cost, Step #2 — Determine the total cost of materials, equipment, and permits,
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Use our free labor cost calculator to price your team’s time, including employee wages, direct costs, indirect costs, and profit. Get accurate hourly, project, and even annual labor costs, then enter those numbers into our service price calculator—or create a professional service estimate. Use Calculator Start 7-Days FREE Trial.
